Okay folks, I here’s the rundown of the new CNNIC report — just things I thought were fairly significant. I know, a lot of the number below would be much better represented graphically, and I’ll be doing that soon but probably can’t Slideshare my Keynote slides for a while, I’m afraid.

First, the big number: 253 million Internet users. That of course puts China over the top to claim the number 1 spot, but we’ve all known that for some time. The total represents a 56.2% year-on-year growth — up by 91 million from June of last year, and up 43 million from December, when the last CNNIC report, number 21, came out.

The penetration rate of 19.1%, (which assumes a total population of about 1.325 billion) compares with penetration rates of 71.2% in South Korea and 68.4% in Japan, which rank among the highest in the world. Chinese Internet penetration is marginally lower than developmentally comparable Russia, which stands at 20.8%. Iceland is highest at 85.4%, the U.S. has 71.9%, India only 5.3%. Total global Internet penetration is higher than China’s still, at 21.1%. But at current growth rates China should be at or above the world average by year’s end.

The Chinese Internet now has 158 million registered IPv4 IP addresses, a 33.7% growth rate for the year. IPv4 IP addresses now have surpassed the number in Japan, and are now second in the world. There are 6251 IP addresses for every 10,000 Chinese Netizens — more than at the end of 2007 by 191 per 10,000. The total number of websites in China now stands at 1.91 million, representing an annual growth of 46.3%. Of these, .cn Websites comprise 71.4%, or 1.37 million.

Access: 84.7% of Chinese Internet users are now accessing the Net via broadband. That’s 214 million broadband users, compared with 168 million at the end of 2007. This to me is tremendously impressive. We can officially pronounce the age of dial-up over.

There are now 84.7 million individual computers accessing the Internet from homes, an increase of 6.7 million in the first half of 2008, for a half-year growth of 8.6%. Desktop PCs remain the main form of access, with 87.3% of Netizens accessing by desktops. Notebook computers and mobile devices are increasingly important to, with 30.9% and 28.9% respectively. These are both trending upward while desktop PC access is declining. Access via mobile phone is still mainly supplemental, and is rarely the main means of access. Of the 73.05 million who reportedly use mobile handsets to access, highest rates are in the 18-24 age group, with 56.1% of mobile Internet users in that age range and 86% 30 or under. Students make up a huge percentage of those — 39.7%

Home access to the Internet has increased from 67.3% at the end of 2007 to 74.1% currently. But 39.2% are accessing from Internet cafes — a total of 99.18 million, representing an increase in this half-year period of 2.8 million people. (Note this doesn’t mean exclusively, or most ofen; there’s a “most often” question below). Male Internet café users account for 63.3%, and they are predominantly young, with 70.7% of them 24 years of age or younger. That compares with 49.9% of total Netizens in that age group. (More on demographics in the section of that title). Meanwhile, 22.7% say they’re accessing from the workplace, and 13.1% say they’re accessing from campus.

For the one-answer-only question on where respondents most often access the internet, the breakdown is as follows:

  • Home: 59.4%
  • Internet café: 19.6%
  • Workplace: 12.5%
  • Campus: 8.1%
  • Other: 0.5%

I’ll reiterate this for the umpteenth time: Internet cafes are absolutely critical for understanding how young Chinese are using the Internet, and reaching them in I-cafes has to be an important part of how any marketer interested in that demographic approaches it.

Average monthly home Internet access fees are now 77 RMB (abut $11.30), which is up from 74.9 RMB at the end of 2007. Average monthly spend for Internet cafe access has declined in the same period by 6.8 RMB, from 51.6 RMB to 44.8 RMB.

Demographics: Females now account for 46.4%, up 3.6 percentage points from the end of 2007. Total male penetration stands at 19.9%, and female at 18.3%, which is up appreciably from the 14.1% female penetration rate in the end of 2007. Remember, males outnumber females by something like 114 to 100 if I’m remembering right.

China’s Internet users are young, and getting younger despite the One Child Policy. 68.6% of Chinese Internet users are 30 years of age or younger. The average education level of Internet users continues to head lower and more reflective of the general educational makeup of the country; currently, Netizens with a high school education represent the most, at 39%. Students make up 30% of all Chinese Internet users, with the next largest group being employees in enterprises, who represent 25.5%.

Spending power is still quite low. Only 6.8% of non-student Internet users make over 5000 RMB ((about US $733) per month.

Time Online: The average Chinese Internet user spent 19 hours a week online in the month of June 2008. This is up from the average time at the end of 2007 (16.2), but that number had fallen from the previous period, and as the CNNIC report says, “this fluctuation is due to the large number of new Netizens being added and the unstable structural attributes of Netizens.” Taking fluctuations into account, average time per week in the first half of the year was about 14 hours.

What People Do Online: The 10 most commonly used applications, in order, are Internet music, Internet news, instand messaging, Internet video, search engines, email, online games, blogs and personal spaces, forums/BBS, and e-commerce.

  • Internet Music: 84.5% (down from 86.6%)
  • Internet news: 81.5% (up marginally from 81.4% from 73.6%) - thanks Tangos!
  • Instant messaging: 77.2% (down from 81.4%)
  • Internet video: 71.0% (down from 76.9%)
  • Search engines: 69.2% (down from 72.4%)
  • Email: 62.6% (up from 56.5%)
  • Online games: 58.3% (down from 59.3%)
  • Own a blog/personal space: 42.3% (up from 23.5% but at the end of 07 it was “updates”)
  • Visit forums/BBS 38.8% (not on the list in end of 07)
  • Online purchasing: 25% (up from 22.1%)
  • Online banking 23.4% (up from 19.2%)
  • Posting to forums/BBS: 23.4% (not on list at end of 07)
  • Online education: 18.5% (up from 16.6%)
  • Online trading/mutual fund investment: 16.9% (not on last list)
  • Online job search: 14.9% (up from 10.4%)

Search is now used by 69.2% of Netizens, and stands as the fifth largest application. Searchers increased by 23.04 million in the first half of 2008, for half-year growth of 15.5%. That’s still much lower than the U.S., where search is used by 91%. Usage rates of search increase, as one might expect, with education level. For holders of Bachelor’s degrees and above, it’s over 93%. Because in the last two years the percentage of high school-and-lower Netizens has grown so fast, as the CNNIC report suggests, the educational dilution may have influenced the overall percentage of search users.

Email use is now 62.6%, the sixth most widely-used application. This is a substantial change from just six months ago. The first half of 2008 saw growth in email use by a total of 39.73 million people. Applications like ecommerce have helped stimulate e-mail use, the reports authors say, but China’s relatively high rate of IM use continues to stymie email adoption.

Instant messenger use rate, as both Tangos and I have remarked is somewhat surprising, is down in terms of penetration at 77.2%. It grew in absolute numbers, of course, to about 195 million people — that’s up by 24.42 million people for a growth of 14.3 percent. Penetration still remains significantly higher than the U.S. rate of 39% and the South Korean rate of 47.8%.

Entertainment remains central to the Chinese Internet. Of the top ten applications, the three biggest entertainment apps are Internet music, internet video (I’m assuming this includes both sharing and P2P), and online games. Internet music remains the biggest, with use rates of 84.5%, or 214 million people. It’s a major driver of Internet use growth in China, the report notes. Internet video use is now at 71%, or 180 million people, the fourth largest app — though as noted in the list above, that’s somewhat lower in terms of penetration rate from the previous period.

Online game use is 58.3%, number seven app, with 147 million online gamers, more than the 35% in the United States. 53% are playing online role-playing games (MMORPGs), with a whopping 78.15 million players! Of all online game players (casual and otherwise), 18.6% are playing for 10-20 hours a week, 17.2% are playing for 20 to 40 hours a week, and 7% are playing 40 or more hours a week! The average is 11.9 hours per week. (I trust at least some of these people are making money, though, as gold miners in MMOs!)

It’s been widely reported that e-commerce is really taking off of late in China, and the CNNIC numbers bear out this observation. Online shopping rates are now 25%, or 63.29 million people; 16.88 million were added just in the last half year. Not surprisingly, online shopping rates in Shanghai are the highest in China, with ecommerce penetration at 45.2%. For Beijingers, a less acquisitive lot if I may so opine,  the number is 38.9%. This boom in e-commerce has been facilitated of course by a more developed payment and fulfillment ecosystem. China’s online shopping rate of (again, about 25%) compares with 66% in the U.S. and 57.3% in South Korea.

Online payment and online banking development have developed quickly, with 22.5% using online payment and 23.4% using online banking. Online payment reached 23.79 million people in the first half of the year, a growth rate of 71.7%.

Online communities aren’t well differentiated in the study, and it’s not always clear how some of the not-very-blog-like SNSs fit in. In any case, the importance of social media is certainly recognized: “Blogs and personal spaces as well as forums/BBS are among the top ten apps and reflect one of the new main features of the Chinese netizenry,” the report proclaims. 38.8% of Chinese Netizens visit forums or BBS, a total of 98.22 million people — again, this seems low to me, but it’s still not an absolute number to sneeze at.

107 million people say they use of blogs and personal spaces — 42.3% of the Chinese Netizenry. People who responded positively to a query on whether they’ve updated a blog or personal space within the last half year came in at 28%, more than 70 million people for a growth rate of 43.7 for the half year period.

Internet News:  81.5% of respondents use news online, which works out to 206 million people. Use of this third largest Internet service increased by 51.64 million people, for a half-year growth rate of 33.4% — 8% higher than at the end of 2007. This has to do, the report’s authors surmise, with the density of news stories in the first half of the year.

Other Applications: Related to the rise in e-commerce use, online banking has seen a surge in use, with 23.4%  of Netizens saying they bank online. This makes for a half-year growth rate of 47.1%. Still, online banking penetration rates are much lower than the 53% rate for the U.S. or the 39.1% rate in South Korea. Stock trading and/or mutual fund investments, which were all the rage in the last year, produced a pronounced uptick in this activity over the last half. 17.9%,percent of Netizens say they’ve engaged in online stock trade or investment, for an increase of 4.66 million people in the first half. That’s actually higher than the 5.4% rate in South Korea, or even the U.S. with its 11%

The online job search rate in China is 14.9%, which is up a whopping 72.8% for the half — a huge surge in online job hunting. I honestly have no explanation for that. Online education also grew substantially, with 18.5% of Netizens participating — a total of 46.69 million bettering themselves through online coursework. The last few years have seen high growth in this area.

Other Interesting Survey Results:  Some other neat data for you. Asked on a scale of 1 to 5, with 5 being the highest,  here’s how Chinese Netizens felt how much the Internet helps them in –

  • Work and Study: 3.87
  • Expanding your social circle: 3.38
  • Deepening relations with old friends: 3.66
  • Enriching your entertainment life: 3.91

Trust: Again, on a 1 to 5 scale, they were asked about the extent to which you trust:

  • BBS/Blog content: 2.94
  • Safety of transactions: 2.92

The percentages replying “reliable” or “very reliable” to those same trust questions:

  • BBS/blog content: 15.7%
  • Transaction safety: 25.1%

And finally, some psychology- (read: Internet-addiction-) related questions, once again on a 1 to 5 (strongly disagree to strongly agree) scale.

  • In my daily life, I can’t leave the Internet: 3.54
  • Sometimes I feel like I’m deeply addicted to the net: 2.50

Those answering “agree or agree strongly” to those questions were 53% and 18.3% respectively. Sounds like there are a lot of people in denial about their Internet addiction!

Hope you all find this helpful!